MGM CEO Leaves Door Open for Buyout of Barry Diller’s People Inc.

MGM Resorts International CEO Bill Hornbuckle is leaving open the possibility that the casino operator will acquire Barry Diller’s equity. People Inc.a striking turnaround after the media company abandoned its own efforts to take over MGM.

Asked this week at the Global Gaming Expo whether MGM would consider buying People Inc., Hornbuckle said MGM would continue to seek what is in the best interest of shareholders and “try to unlock value in a company that we believe is vastly undervalued.”

Hornbuckle highlighted MGM’s entire assets, including BetMGM, its Macau casino operations, its under-construction hotel complex in Japan and its Las Vegas properties.

The Wall Street Journal reported last week that MGM was exploring a bid for People Inc. The publishing and holding company, formerly known as IAC, owns about 27% of MGM and is its largest shareholder.

People Inc. last week withdrew its $48.30 per share purchase proposal for the remainder of MGM. Diller said the “combination” of factors required to complete the transaction did not come together as the company had hoped, but said People Inc. remained interested in a possible strategic transaction with MGM.

Hornbuckle called Diller and People Inc. a “tremendous shareholder” and said Diller remains optimistic about Las Vegas.

“There’s nothing like it in the world,” Hornbuckle said. “This is the only place, especially in its world, where AI will not disintermediate.”

Unlike some of People Inc.’s publishing and digital businesses, Hornbuckle said, Las Vegas is built around physical experiences that artificial intelligence can’t replace.

“People come here to physically enjoy things, and that’s not going to change,” he said.

MGM shares were trading near $32 before the G2E discussion, well below the $48.30 price offered by People Inc. in June.

The talks between MGM and People Inc. come as one of MGM’s biggest rivals in Las Vegas prepares for a take-private transaction.

Caesars Entertainment shareholders last week approved the sale of the company to Fertitta Entertainment for $17.6 billion, including debt. The deal would combine Caesars’ casino and digital businesses with Tilman Fertitta’s Golden Nugget casinos, Landry’s restaurant group and other hotel assets.

Caesars CEO Tom Reeg said operating as a private company would allow management to take a longer-term view.

“We are forced as public companies to think in 90-day increments, much more than is healthy for any company,” Reeg said. “That’s not how you run a business.”

He said the tie-up with a hospitality company that has over 400 outlets across the country creates an opportunity to connect the businesses into a wider customer ecosystem.

The transaction is the subject of intense antitrust scrutiny from the Federal Trade Commission, which recently issued a second request for information.

Reeg called the demand normal for a transaction of this size and said the markets under scrutiny are not particularly important to the combined company.

“You shouldn’t be surprised if one or two properties end up being given away,” Reeg said. “But I wouldn’t expect them to be needle movers from a news perspective.”

Reeg said recent interest in the casino space from Diller, Fertitta and activist investor Carl Icahn indicates that sophisticated investors see long-term value in Las Vegas despite lower attendance and concerns about pricing.

“Some of the smartest people in the world tell you, ‘How do I get in?’” Reeg said.

Asked if these investors were buying because Las Vegas was a good deal, he said, “I think it’s both.”

Beyond Las Vegas, Hotels in Wynn CEO Craig Billings said construction of Wynn Al Marjan Island in the United Arab Emirates remains on track despite regional conflict which contributed to an approximately $600 million increase in the project’s budget.

Billings said about half of that increase was related to the conflict, but the complex only missed one day of construction.

Most of the disruptions occurred over a period of two to three months, when supply chains were redirected to different ports, he said. Shipping costs also increased because insurers were unwilling to cover certain routes.

“From our perspective, it’s very simple: Be open, start earning EBITDA,” Billings said. “You’re going to pay for these increased costs very, very quickly.”

Billings said Wynn’s property and construction insurance costs at the site have not increased, citing security provided by UAE authorities. The complex is scheduled to open in September 2027.

The property will be the first integrated resort offering casino gaming in the UAE and represents Wynn’s largest expansion beyond its existing markets of Las Vegas, Boston and Macau.

Billings also downplayed the overall ridership figures in Macau, which saw record traffic in August.

Wynn’s bottom line depends less on the number of people entering Macau than on the number of customers arriving, he said. The company targets the premium segment of the market.

Billings described Macau as the world’s largest gaming market, generating about five times the gaming revenue of the Las Vegas Strip, with about 30 percent more hotel rooms.

“Whether Macau is up 2% or down 3%, you have to look at any given cycle,” he said. “We remain very, very focused on the medium and long term in Macau.”

Hornbuckle said MGM is the smallest of the major operators in the market and also focuses on higher-value customers. He said 94% of MGM’s occupied rooms in Macau are occupied by known casino guests, and the company is converting more standard rooms into suites to meet demand.

And while luxury retail sales have been weak in China, Billings said that’s not necessarily a warning sign for casino spending.

Chinese consumers are changing their brand preferences, he said, weakening the historic relationship between luxury retail sales and gaming revenue.

Hornbuckle said MGM’s integrated resort in Osaka, Japan, was on time and on budget after more than a year of site preparation on the artificial island of Yumeshima.

The development will cover approximately 97 acres and 18 million square feet. Hornbuckle said his casino floor would be four times the size of MGM’s Bellagio casino floor.

“We’re finally getting out of the dirt,” he said. “You can see the structures. The steel is being laid.”

Hornbuckle said that if Singapore’s integrated resorts provided a reasonable comparison, MGM Osaka could quickly become a $2 billion cash flow business.

Japan has so far only approved the Osaka development, but Hornbuckle said the potential for competition in or around Tokyo would not pose a threat, given Japan’s population and the time it would take for a rival to propose and build a new project.

“If we weren’t five years ahead of this – and then some – I would be absolutely shocked,” he said.